Shareholders of Compaq Computer Corp. overwhelmingly approved the sale of the 20-year-old company to Hewlett-Packard Co. in a stock-based deal valued at about $20 billion.
As a result of the merger, Compaqs 63,000 employees will be melded with HPs 85,000 workers, creating the worlds second largest computer company, behind IBM. However, HP and Compaq officials have warned that the deal will result in the elimination of about 15,000 across the two companies.
Unlike the rancorous HP shareholders meeting on Wednesday, which was symbolic of the companys bitter six-month proxy fight to win approval, Compaqs special shareholder vote today was uneventful, with the deal drawing support from about 90 percent of the voters.
Compaq Chairman Michael Capellas, who would become president of HP following the merger in early April, touted the deal as the best alternative to assure shareholders a better return on their investment.
"I am gratified that Compaq shareholders have seen the power behind the merger of these two great technology companies and given the board of directors and management their resounding support," he said following todays vote.
While Capellas said Compaq is prepared to move forward with the acquisition, the merger cannot be completed until HPs vote is officially certified by IVS Associates in Newark, Del., a process the company said could take several weeks.
Merger foe Walter Hewlett, an HP board member and son of one of the companys co-founders, yesterday rejected HP Chairman Carly Fiorinas assertion that the outcome of the vote had been determined, based on HPs preliminary estimates, and urged all parties to await the official tally.
"The results of todays vote are too close to call," Hewlett said at a news conference yesterday in Cupertino, Calif, where HPs vote was held. "In a proxy contest this close … it is simply impossible to determine the outcome at this time."
Should the merger go forward, it will mark the end of what was for seven years the worlds largest PC vendor.
Compaq was founded in 1982, following the oft-told story of how its three founders, then employed by Texas Instruments, drew up plans for a new IBM-compatible portable computer on a napkin in a Houston restaurant.
Compaqs business surged during the 80s and early 90s, shattering business growth records, as the company drew away market share from then industry leaders IBM and Hewlett-Packard by offering reliable PCs and servers based on industry standards at a lower cost.
But as Compaqs business grew, it ended up losing its low-cost competitive edge as it tried to emulate IBMs product breadth through the acquisitions of high-end computing companies such as Tandem and Digital Equipment Corp. Those mergers, undermined by flawed integration efforts, resulted in mounting losses.
At the same time, Compaq saw its share of the once lucrative PC market erode due to competition from direct-order companies such as Gateway Inc., and more notably Dell Computer Corp., which last year ousted Compaq as the worlds largest PC vendor.
Hard hit by an industry-wide downturn in sales last year and facing increasing shareholder pressure to revive earnings, Compaqs board agreed to a buyout by HP last September.
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